About giving

We are grateful to Which? for providing us with the following guide to giving from their website www.which.co.uk

Giving Facts

According to the most recent annual survey (2006/2007) carried out by the National Council for Voluntary Organisations (NCVO) and the Charities Aid Foundation (CAF) the latest annual estimate of total UK giving is £9.5 billion.

That’s a lot of money in anyone’s terms, but unfortunately is less than the previous year.

The research suggests that, apart from religious causes, which saw an increase in donations, all other causes saw a decrease in giving from the previous year.

Tax changes that came in from April 2008 will also eventually decrease the amount of money charities receive as the amount that can be reclaimed through Gift Aid has been reduced from 22% to 20%. Although until April 2011 the Government will continue to give an extra 3p for every £1 donated through Gift Aid to help charities with the transition.

If this trend continues, charities will be competing for decreasing numbers of donors for a decreasing amount of money, so it’s all the more important that if you do give to charity you do so in ways that achieve the highest amount of income for your chosen favourite cause.

Who are we giving to?

The cause which is supported by the greatest number of people is medical research which received 17% of all donations during 2006/2007. This was followed by causes supporting children and young people, and then hospital/hospices charities.

The chart below shows the amount donated to different causes during 2006/2007.

Share of total amount given by cause

Charitable cause	Percentage given
Medical research	17%
Religious	16%
Children/young people	12%
Hospital/hospices	11%
Overseas	9%
Other	7%
Education	6%
Animal	5%
Disabled	4%
Environment	3%
Homeless	3%
Sports	3%
Elderly	2%
Health	2%
Arts	0%

Source: UK Giving 2007: NCVO & CAF

Here are a few more facts from the survey about charitable giving:

The three groups most likely to donate to charity are women; people aged 45-64 and managers/professionals
More than half – 54% - of the public in 2006/07 gave to charity in the four weeks before the survey – a fall of 3% from the previous year
There is little difference in the average amount given over time – still at £16 per head of population in a four week period
Giving cash remains the most common method of giving while direct debit and cards/cheques are the methods which raise the most money

In the following we look at the various ways you can give to charity and what these mean for the charities themselves.

Gift Aid

If you are going to give to charity, why not make the Government give as well.

If you're a UK taxpayer, a great way of giving to charity is through the tax-efficient Gift Aid. Since it was introduced Gift Aid has increased in size to be worth nearly £1bn a year to UK charities and their donors.

Your chosen charity can claim back basic-rate tax on any donations you make from HM Revenue & Customs, so every £1 you give is worth 25p more to the charity. Therefore if you give £10 through Gift Aid, the charity actually receives £12.50. If you give £100, the charity receives £125.

Losing out through lower tax

Because the basic rate of tax went down from April 2008 from 22% to 20%, charities stand to lose money

To help charities with this transition, HM Revenue & Customs will automatically pay charities a further 3p for every £1 made through Gift Aid between 6 April 2008 and 5 April 2011. So, at least until April 2011 your favourite charity will continue to receive 28p extra for every £1 you donate this way.

Who can donate through Gift Aid?

You can use Gift Aid if the amount of tax you have paid in the tax year of the donation is enough to cover the amount of tax the charity will reclaim against the donation.

The tax paid by you may be Income Tax, Capital Gains Tax or tax credits on UK company dividends. Tax years start on 6 April and run until 5 April the following year. If you don't pay tax then you shouldn't make gifts through Gift Aid as you may be asked to pay the tax to the charity yourself.

Higher-rate taxpayers

If you are a higher-rate taxpayer, there is another bonus here for you. Under Gift Aid, charities can claim tax back at only the basic rate (20%), which means you can claim back the difference between the basic and higher rate on all Gift Aid donations you have made during the year (a further 20%).

You can also choose to give some or all of this difference to charity if you wish.

If you complete a Self Assessment tax return you can claim back the higher rate element of the tax relief on any donations made to charity through your tax return.

If you don't normally complete a Self Assessment tax return, call your tax office and ask for the higher rate relief to be reflected in your tax code.

How to make a gift through Gift Aid

In order for your donation to qualify under Gift Aid you need to make a declaration saying you would like to donate through the Gift Aid scheme and confirming that you have paid enough tax to cover the charity’s claim.

The charity may ask you to sign a written declaration or they may accept an oral declaration (particularly if you are making the donation by telephone).

A Gift Aid declaration can apply to:

A single donation
All future donations to the same charity
Donations made to the charity in previous six years
Or a combination of all these options

The charity will ask you which type of declaration you want to make.

Payroll giving

Currently, over £85 million is raised for charitable causes through payroll giving.

If your employer offers a payroll giving scheme, you can support a charity with regular donations direct from your salary.

Your donation is deducted from your salary before tax – so the charity receives your donation before tax is deducted from it. This means the charity doesn't have to reclaim it from HMRC, and it costs you less to give.

How does it work?

You can give this way providing your employer offers a scheme, then you simply authorise it to deduct the amount you want to give to charity from your pay. Your employer then pays those donations to a Payroll Giving Agency (these are approved by HM Revenue & Customs) and the Agency sends on your donation to the charity of your choice.

Once your donation is set up, you don't have to do any more. Each week or month, as regular as clockwork, your charity will benefit.

How much does the charity get?

The charity will receive the amount you ask to be deducted from your pay. The agreed deductions your employer makes from your pay are done before you pay tax, which means that you get tax relief included in your donation at your top rate of tax.

The table below shows how much a donation of £5 or £10 would cost you depending on what level of tax you pay.

Your donation (gross)	Actual cost to you if you pay tax at 20%	Actual cost to you if you pay tax at 40%
£5.00	£4.00	£3.00
£10.00	£8.00	£6.00

So how does the charity benefit?

The charity benefits from the fact that it receives a regular flow of funds it can count on. Also –you can always decide to give a bit more, as it is costing you less in tax.

How can I find out if my employer offers Payroll Giving?

Ask your employer's payroll department. If they don't offer a scheme, suggest that they start one - it is easy and inexpensive to run. They can find out more about how to get started in the HMRC Guidance for employers.

How do I know if I am eligible to join the scheme?

If your employer deducts tax through Pay As You Earn (PAYE) then you will be eligible to join your employer’s payroll giving scheme, providing it offers one. If you are a pensioner, receiving a pension from your employer’s occupational pension scheme – again with tax deducted through PAYE, then you are also eligible to join the scheme.

Do I have to tell my employer which charity I wish to support?

No. The Payroll Giving Agency will provide you with a charity nomination form which you can complete and return directly to the agency. Alternatively, the agency might provide you with a charity card or charity cheque book so that you can give directly to the charities of your choice. The Payroll Giving Agency will keep your choice of charity confidential from your employer if you wish.

Can I change the charities I wish to support and the amount I pay?

You can change the charities you support by simply letting the Payroll Giving Agency that deals you're your scheme know. You can also change the amount you pay, however, to keep costs down your employer may limit the number of times you can change the amount of your donation to once or twice a year.

If you want to stop giving altogether, simply tell your employer’s payroll department.

Will administration charges be deducted from my donations?

Most Payroll Giving agencies do make a small charge which they deduct from your donations before distributing them to charity. The charge is normally no more than 4 per cent of the donation, or 25p per donation, whichever is the greater.

Some employers pay the agency's charges so that the full amount of your donations can go to charity.

You can find out more about payroll giving on HMRC’s website or Payroll Giving in Action.

Street fundraising

Street fundraisers aren't everyone's cup of tea, but charities need them.

A big issue for charities is whether to use face-to-face or street fundraising, sometimes called (by people who don't like this method) charity mugging or 'chugging'. This is where a team of people stand on the street and sign passers-by up to give money to charity by direct debit.

This method of fundraising is unpopular with the public, but it does encourage some people to sign up, otherwise charities wouldn't use it. Unfortunately all fundraising costs money, and charities use face-to-face methods only because they work well for them compared with other ways of raising money.

Teams are usually employed by professional fundraising companies, to which charities pay a flat fee for each person signed up (typically around £90).

So if you sign up to donate a small amount by monthly direct debit, it's possible your first year's donation may only just cover the cost of signing you up. However, by the second year, the regular payment begins to make a difference.

However, most charities have an arrangement with their agency so that the costs of recruiting people who stop giving within the first year will be refunded.

Best practice guidelines

There are best practice guidelines that street fundraisers should abide by. These are set by the Fundraising Regulatory Association (PFRA).

The guidelines say that fundraisers should:

Tell you whether they are being paid or are volunteers and explain on what basis they are being paid
Carry and display ID to show who they are working for
Explain how the voluntary organisation will communicate with you after you have signed up
Ensure that all personal information is handled responsibly and securely
Not say or do anything to pressurise or harass you
Be polite and respectful
Not confuse or mislead you
Never behave in way that might bring the voluntary group they are representing into disrepute

Other ways of giving

There are plenty of ways you can give to charity – and not always involving money.

Set up a regular payment

Charities love regular donations because it gives them an income they can count on. As a regular donor you also feel more involved as you'll usually receive updates on what the charity is doing and what your money is being spent on.

Give shares or other assets

You can give assets such as land, property and shares to charity tax efficiently.

Capital gains tax

These gifts won't attract capital gains tax when you donate them but if you have made a loss on the asset you won't be able to use that loss to offset any capital gains tax you might have to pay on other assets.

Income tax

You can usually claim income tax relief on any assets you donate.

Essentially, the value of the asset you give will be deducted from the amount of income you'll have to pay tax on. So if your income is £40,000 and you donate assets worth £5,000, you'll pay tax on only £35,000 during the tax year that you donate.

Donating shares

You can donate shares to Share Gift, which will sell them on the stock market and distribute the proceeds to charities. This is a good way to donate shares if you have a small number of shares that would cost more to sell than they're worth.

Remember a charity in your will

Legacies give you the chance to make a real difference even after you're gone, and most gifts to charities are free of inheritance tax. You can either name a particular charity in your will or leave a sum of money to your executors with instructions as to how this should be distributed.

Your solicitor will be able to give you information on how charitable legacies can be including in your will.

If you change your mind you'll have to make an amendment to your will.

Most charities can offer you guidance and information about leaving a legacy, or you can contact Remember a Charity, an organisation that encourages people to leave legacy gift.

The CAF Legacy Service

As an alternative to naming a specific charity in your will you can make a gift through your will to the Charities Aid Foundation (CAF), and let them know which charities you wish your money to go to

This service is more flexible because it allows you to change your list of charities at any time without needing to update your will. You can find out more about the Legacy Service at the Charities Aid Foundation.

Will Aid

If you haven't made a will yet, then this year is the perfect time because you can give to charity at the same time. Every other year, in November, Will Aid runs a campaign through thousands of solicitors in the UK.

The campaign will be running in November 2008 when thousands of solicitors throughout the UK will waive their fee to draw up a basic will. Instead you'll be asked if you would consider making a donation to the campaign.

All money raised by the solicitors are given to the Will Aid charities. You can find out more at Will Aid.

Give to charities in your local area

Many charities operate in local communities and, in some areas, community foundations have been set up to support local causes, especially to link local donors with local needs.

Cards and gifts

Many charities sell their own Christmas cards, and some of the larger ones produce gift catalogues, often throughout the year as well as at Christmas.

If possible, buy your cards and gifts direct from the charity because that way it receives a higher percentage of the profit.

Alternative gift schemes

If you're really stuck what to get someone who has everything for Christmas, give on their behalf to someone who doesn't have everything. The Charities Advisory Trust, Oxfam, Save the Children and World Vision UK all run 'alternative gift' schemes where your money buys a specific item or service.

Many 'gifts' help to tackle poverty in communities around the world, for example you can buy two dozen chickens for £12, tools for farming for £30 or 5 bags of seeds for £10.

The person you are buying the gift on behalf of will receive a card describing the item. Buying gifts this way can save someone's life.

Gifts in kind

There are thousands of charity shops in the UK which rely on donations of good quality, re-saleable items of clothes, books and bric-a-brac. This way of giving costs you nothing, but is a significant benefit to the charity. And you're helping the environment too by passing on re-useable items.

The Association of Charity Shops will tell you more.

But please only donate things you'd be willing to buy yourself. Charity shops are spending £4.5 million a year on waste disposal for things they can't sell like single shoes, dirty underwear or even false teeth.

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